The milestone payments were realized, and losses narrowed year over year. The company achieved revenue of 1.54 billion yuan (yoy +91.6%) in 2023, mainly confirming down payments and milestone payments related to authorized cooperation; adjusted annual loss of 451 million yuan, a year-on-year decrease of 24.4%; net operating cash flow of 59.56 million yuan, which changed from negative to positive; and cash and financial assets in hand of 2.53 billion yuan, an increase of 20 times over the previous year.
The internationalization of SKB264 is accelerating, and MSD is intensively developing 6 Global Phase III projects. According to the company's 2023 annual results announcement, SKB264 has achieved a number of key developments at home and abroad: (1) at home: ① TNBC: the terminal treatment TNBC has been accepted by the CDE and is expected to be approved within the year, and is expected to be approved within the year, the first domestic TROP2 ADC; first-line treatment initiated phase III; ② HR+/HER2-BC: second-line treatment has started phase III; ③ EGFR mutation NSCLC: TKI treatment failed in stage III and was recognized as a breakthrough therapy by CDE; ④ EGFR wild type NSCLC: First-line treatment with A167 is in phase II. (2) Overseas: MSD has initiated 6 global phase III clinical trials: NSCLC (4), HR+/HER2-BC, and endometrial cancer.
The ADC platform continues to be upgraded, and more new ADCs are entering clinical practice. According to the company's 2023 annual results announcement, A166 has declared NDA treatment for HER2+ BC domestically; SKB315 is in global phase I/II; SKB410 is in phase I; and SKB501's IND has been accepted by the CDE. The company is also continuing to optimize the ADC platform, and is also cooperating with Southwest Medical University to lay out the RDC field.
A number of non-ADC assets are deployed in the field of tumor self-prevention. According to the company's 2023 annual results announcement, A167 completed first-line enrollment for nasopharyngeal cancer; A140 NDA for RAS wild head and neck squamous cell carcinoma was accepted by CDE; A400 for RET+ NSCLC is in critical clinical trials; SKB378 and SKB336 have all completed phase I.
Profit forecasting and investment advice. The company's revenue for 2024-2026 is estimated at 1,245, 1,181, and 2,208 billion yuan. The company's ADC platform is globally competitive. Using the DCF valuation method, a reasonable value of HK$178.33 per share (HKD/CNY = 0.92) was obtained, maintaining a “buy” rating.
Risk warning. Risk of R&D failure, product sales falling short of expectations, market competition exceeding expectations, etc.